Update on FX setup on NZDUSD (30 July 2012)

Remember back on 30 July 2012 I had placed a long position on NZDUSD upon breakout from resistance level (0.80500). I have just closed this position today with profit when I saw reversal signal. To recall, I hereby upload the price chart I posted in my earlier post when I entered the long position:

NZDUSD - Daily Chart (before)

We anticipate that after the breakout occurred, the price will rally as there will be more buyers coming in to join the ride and seller are leaving the market. And guess what? The price continue to go upwards direction and rally until today - a big bearish engulfing bar formed at round number (0.82000). This big bearish engulfing bar signalling losing steam of bullish trend and the price is high likely to retrace now. I closed this long position despite my profit target set at 0.82500 was not hit.

See the chart below for the price action after my entry:

NZDUSD - Daily chart (after)

So what's next?

So what is next we going to expect on this pair? Our bias on this pair is still bullish unless a new low is formed on the following days. Since a big bearish engulfing bar has just been formed, therefore the price is likely to be in retracement stage now. We should wait for the price to retrace back to the key level (previous resistance level potentially turned into support level) and expect to see a bullish price action (such as bullish pin bar, bullish engulfing bar or 2 bars reversal) for us to rejoin the current bullish trend.

NZDUSD - Daily Chart (Plan)